OUTLOOK ’13: Russia's polymer market faces major changes

02 January 2013 11:30[Source: ICIS news]

By Sergei Blagov

MOSCOW (ICIS)--The Russian polymers market is set to undergo significant changes in 2013. Notably, the country is expected to discontinue imports of polypropylene (PP) and become a PP exporter as new domestic capacities come onstream.

Russia-based petrochemical major Sibur plans to finish construction of a new 500,000 tonne/year PP plant to be built in Tobolsk. Sibur expects to begin commercial production at the plant, under the name Tobolsk-Polymer, in the first half of 2013. The plant was previously expected onstream in 2012.

The launch of Tobolsk-Polymer is expected to allow Russia to substitute PP imports and become an exporter of PP.

Meanwhile, Russia's Titan Group, based in Omsk, western Siberia, aims to start operation of a new 180,000 tonne/year PP plant. Titan initially expected the PP plant onstream in 2006, however, the project has been subject to repeated delays because of financing issues. The plant, under the name PolyOm, is now due to begin operation in early 2013.

The Russian polymers market is also becoming more open. On 22 August 2012, Russia became the 156th member of the World Trade Organisation (WTO). According to the country's WTO entry terms, the import tariffs levied on most polymers are expected to be fall from 10% to 6.5% in 2013. However, some market participants have raised concerns about upcoming import tariff cuts, with the Russian Union of Chemical Producers voicing objections on 13 December against cutting the import tariffs levied on PP.

Russia's polymer market is also set to witness capacity expansions beyond 2013, with new projects pencilled to come onstream in the next few years.

Earlier in 2012, Russian petrochemical producer Nizhnekamskneftekhim (NKNKh) pledged to build newethylene and polymer facilities in 2016-2017. A new 1m tonne/year ethylene production unit is expected to start operation in 2016, while NKNKh aims to finish construction of a new 600,000 tonne/year polyethylene (PE) plant and 400,000 tonne/year PP plant in 2017, it said.

Russia's polyvinyl chloride (PVC) capacities are also set to increase in 2013-2014. In September, PVC producer Sayanskhimplast, based in Irkutsk region, Eastern Siberia, reiterated plans to raise its PVC output up to 350,000 tonnes/year by 2014, and 600,000 tonnes/year by 2020. Sayanskhimplast produced 259,000 tonnes of PVC in 2011, nearly half of Russia's total output.

The €750m ($987m) RusVinyl plant currently under construction in Kstovo, Nizhny Novgorod region, is due to start producing 330,000 tonnes/year of PVC from early 2014. The Sayanskhimplast and RusVinyl expansion projects would help limit the need for PVC imports into Russia.

Russia's polyethylene terephthalate (PET) market is also moving towards import substitution. In January 2012, Russian authorities announced that work had started on the construction of a major import-substitution plant to produce 486,000 tonnes/year of bottle-grade PET in Kabardino-Balkariya region, southern Russia.

The project’s first stage, with a capacity of 162,000 tonnes/year, is due onstream in 2013. The second 288,000 tonne/year stage would be built by 2014 and the plant’s total capacity is scheduled to reach 486,000 tonnes/year in 2015.

In October 2012, Sibur also pledged to increase the capacity of its bottle-grade PET plant, Polyef. Polyef started construction works aimed to raise its PET capacity from the current 140,000 tonnes/year up to 210,000 tonnes/year.

Russia's upcoming polymer projects are aimed to substitute imports thus changing the country's market landscape. However, it remains to be seen whether all of these projects will become operational as currently scheduled.